Presenting his emergency budget yesterday, George Osborne made two enormous wagers, while pulling off two important tactical victories. The "unavoidable budget" was how Mr Osborne referred to it, but in reality it is the budget of a gambler. The Conservative chancellor is betting first that the economy will not collapse under the fiscal pummelling it is about to receive – the rise in VAT and other taxes, the cuts in public spending and benefits – and second, that the Liberal Democrats will stand firm with the Conservatives if the already bad times get much worse. If those bets go wrong, the new chancellor will plunge the economy into another recession – and could blow apart his coalition government too.

But that will not happen just yet. At the dispatch box yesterday afternoon, Mr Osborne was flanked by both Nick Clegg and Danny Alexander. This was not merely good political place-setting; the coalition's junior partners have also dipped their hands in the blood of the cuts to come. So the chancellor's first victory is a big one: he has kept senior Lib Dems on board even while embarking on the biggest fiscal tightening in postwar history. The second achievement is a more public one: Mr Osborne has turned his emergency budget, staged largely to seize the political initiative, into an inevitable announcement of government downsizing. That is the way it has been portrayed in the press, and it is an idea now apparently accepted by the public. But that still, as the old song goes, don't make it so. This budget was unnecessary. By the year's end, voters will have been subjected to four other major financial statements: a budget from Alistair Darling, spending cuts from David Laws – and in the autumn a pre-budget report and a comprehensive spending review. Even Perry Mason would struggle to make the case for a fifth.

More importantly, the austerity measures that Mr Osborne announced yesterday were unnecessary both in their timing and their size. In the middle of a severe worldwide recession, the government plans to make nearly £9bn of spending cuts and tax rises; by the middle of this decade, that figure will have risen to £113bn a year. These figures are much larger than even the most hawkish City analyst expected; and the risk is that the squeeze to come will derail the UK's worryingly tentative recovery. That was the tenor of the warning made by Barack Obama in his letter last week to leaders of the G20 most important economies; if anything, the tightening announced yesterday only heightens the worries.

There are four main sources of national income. The first is government spending, which has now gone sharply into reverse. The second is business investment in plants and machinery and staff, which Gordon Brown tried to encourage through a series of fiddly reliefs – most of which Mr Osborne will now scrap. The third is consumption, which is unlikely to hold up well under the VAT rise in January (plus all the other tax rises) and the cuts in welfare benefits and public-sector spending. That just leaves exports. Given the meltdown in the eurozone, where 70% of British exports go, one would have to be wildly optimistic to expect a big advance there. Putting all these four factors together, the odds on a double-dip recession have risen sharply as a result of yesterday's measures.

Most worrying of all, the chancellor does not have a Plan B: there is nothing to stimulate growth in case the economic outlook gets nastier. No wonder the Office for Budget Responsibility has already estimated that these measures will cost the UK £5bn, or a third of a percentage point of GDP. Nor do things improve over the longer term. Mr Osborne talked well in his speech about the need to rebalance the economy away from the City and towards the rest of the country and to other industries. Yet even setting aside the cancelled loan to Sheffield Forgemasters, his measures militate against any such thing: the lure to manufacturers to invest has been dropped in favour of a 4% drop in corporation tax – a move that will have been welcomed by the City. Over the short and long-term, then, Mr Osborne is taking a big bet that the economy will come right through market forces. That is an act of faith. And he does not have a safety net in case his bet sours.

Tonally, at least, Mr Osborne did not deliver a 1981 austerity budget. This was a budget fully as dramatic as Geoffrey Howe's a generation ago, but in a different tenor. The chancellor was careful to talk about the need for fairness and on child tax credits, in particular, he provided some of it. But Mr Osborne achieved this by a different, more negative, form of ringfencing from the one with which the current debate has become familiar. The first ringfenced group are millions of welfare recipients. But public sector workers are another, with a million set to lose their jobs. Years of hostility between the government and public sector workers beckon. Health and aid spending may be protected, but universities, housing and transport will have to cut a quarter of their budgets. Meanwhile the financiers who caused more of this mess than the Labour government ever did will get away with a small rise in capital-gains tax. That was not unavoidable. It was a matter of active choice.